By Gus Downing
Publisher & Editor

Establishing the industry "ORC Number":  We've all heard the numbers in the press, often times using the total retail loss number of $35B as the ORC number, and it's only normal to expect professionals outside of our industry to use the most accessible number available as their defining label. The problem becomes that when we, as an industry, are trying to influence the state and federal governments to pass laws and allocate funds to help combat the issue, we must provide them with credible numbers that withstand academic challenge and debate. And given that the NRSS is, in fact, the only academically driven and accepted vehicle, we must use these numbers in our representation of the problem to our elected officials and to our retail senior management teams running America's retailers, or we open ourselves up to criticism that if fact can lead to claims that we're exaggerating the number for our own self interest. Which as everyone knows can be a death blow to our efforts.

With that being said, we must also realize that the LP industry itself has not disciplined itself to the point necessary of being able to actually determine the actual ORC impact and establish a baseline for measuring long term. According to the 2011 NRSS report, among the four major sources of inventory shrinkage, retailers attributed 44.2% of their company's losses to employee theft, costing them $15.9 billion, and 35.8% to shoplifting and ORC, costing them $10.94 billion. Of the $15.9 billion in employee theft, slightly over 20% involved collusion with an outsider. If we are to accept this generalization that 20% are in fact collusion and indeed ORC activity we establish a $3.18B loss. Then the more difficult interpretation comes when considering that the "shoplifting and ORC" number of $10.94B is a combined number and impossible to differentiate. Certainly the report is a direct reflection of the information provided and once again we, as an industry, have not evolved to the point of being able to provide this information for the study. Therefore, we're somewhat relegated to the fact that all we can actually prove, based on our only academically accepted model, is that ORC and shoplifting in its entirety is a $14.12B loss to the nation's retailers.

Obviously we all have our own educated and well thought out opinions which we at the Daily respect and invite to be published here in this public venue as it is a critical issue if we expect legislative progress. However we would like to point out that if this were the medical, legal, or accounting industries, this number would be accessible, even with the fact that it wasn't until 2005 that we started to see formal retail LP models specifically designed to combat ORC.

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